Income Taxes

6 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

The provision of income taxes was $5,707 in the three months ended September 30, 2022, reflecting an effective tax rate of 29.5%. The benefit for income taxes was $1,441 in the three months ended September 30, 2021, reflecting an effective tax rate benefit of 17.5%.

The provision of income taxes in the six months ended September 30, 2022 was $5,460, reflecting an effective tax rate benefit of 27.0%. The benefit for income taxes in the six months ended September 30, 2021 was $882, reflecting an effective tax rate benefit of 18.4%.

The increase in the effective tax rate for the three and six months ended September 30, 2022 compared to the corresponding prior periods was primarily due to the net benefit of discrete items related to stock based compensation in the current period compared to prior year.

The deferred tax assets and liabilities are presented net in the accompanying condensed consolidated balance sheets as noncurrent. We expect to receive the full benefit of the deferred tax assets recorded, with the exception of certain state credits and state net operating loss carryforwards, for which we have recorded a valuation allowance.

We had unrecognized tax benefits of $6,433 and $6,112 related to various federal, state, and local income tax matters as of September 30, 2022 and March 31, 2022, respectively. If recognized, this amount would reduce our effective tax rate. 

We are subject to taxation in federal, various state, India, and United Kingdom jurisdictions. We are no longer subject to United States federal income tax examinations for tax years before fiscal year ended 2018. With a few exceptions, we are no longer subject to state or local income tax examinations for tax years before fiscal year ended 2017. We do not anticipate the total unrecognized tax benefits to significantly change due to the settlement of audits or the expiration of statute of limitations within the next twelve months.

Inflation Reduction Act of 2022

Changes in tax law and rates may affect recorded deferred tax assets and liabilities and our effective tax rate in the future. On August 16, 2022, the United States government enacted the Inflation Reduction Act of 2022 that includes changes to the United States corporate income tax system, including a fifteen percent minimum tax based on “adjusted financial statement income,” which is effective for tax years beginning after December 31, 2022, and a one percent excise tax on repurchases of stock after December 31, 2022. We are continuing to evaluate the Inflation Reduction Act and its requirements, as well as its application to our business.